Discuss the various steps of accounting cycle and practical examples?

Answer 1

|Accounting tract the assets, liabilities, owners equity, revenue and expenses of an organization. It provides not only current operating information for management but also track the historical transactions of the entity. It encompases not only cash earned by the organization but also the investment activities, financing activities, lending activities, non-cash charges and recognition of and expiation of the useful life of assets used in the operating of the entity. It also encompasses intangible recording and recognition of items that may have a value yet are not specific in nature such as organizational cost, patents, copyrights and trademarks. I will reflect monies owed, accruals of interest on those monies and also the amounts of excess over operating expenditures that have not been distributed. It is the basis of calculating taxes owed and due as well as a parameter as to the health of the entity and is essential for owners and managers in calculating and projecting operational problems, budgets and compensation. With out accounting no entity could survive. It is the essential information needed to not only run but also perpetuate a continued enterprise. Accounting refers to the process of bookkeeping that are involved in making the financial records of business transactions. These Bookkeeping methods are also used in preparation of statements concerning the assets, liabilities and operating results of a company. It is a very important process in an organization. The information derived from the accounting processes gives complete financial information about the company and conveys its financial standing to the owners and employees of the company. It also shows which products or assets of the company are most profitable and those which are weak. Day to day bookkeeping on the accounting principles, helps in keeping record of daily transactions and also helps in preventing any frauds.